DTN Midday Grain Comments

General Comments

The U.S. stock market indices are higher with the Dow futures up 50 points. The interest rate products are mixed. The dollar index is 25 points higher and in an inside trading session following the move to a new 3-month low on Tuesday. Energies are narrowly mixed. Livestock trade is mixed. Precious metals are lower with gold down $5.

CORN

Corn trade is a penny lower at midday; the overnight up to midday trading range is only 2 1/2 cents. This narrow range is illustrating the neutral reaction to USDA monthly report. The USDA provided a few changes on the WASDE yesterday leading to a 35 million bushel increase in the carryover versus the 7 million increase average expectation. The domestic carryover was raised to 1.837 million bushels. The export number was dropped by 50 million bushels, imports raised by 10 and ethanol usage raised by 25 million to reach the 35 net increase in our carryover. The world ending stocks came in at 208.81 million metric tons versus 208.1 expected and 208.94 on the January report, the range of expectations was 203.5-210 million tons. Argentine production was raised by 1.4 million tons and Brazil by 2.5 million tons giving us a material increase in production but usage was increased to offset the added production giving us the fairly neutral monthly USDA report. As limited as the changes were on the report, the result is a growing supply side fundamental trend which keeps the longer term bear argument in control for the rest of the month. On the March chart the $3.67 area is resistance where we find the 10-, 20-, and 50-day moving averages. Support to note is the $3.59 1/4 low yesterday and this morning then the $3.48 1/2 contract low.

SOYBEANS

Soybean trade is a penny lower at midday, similar to corn action has been lethargic with nearby futures seeing less than a nickel trading range overnight up to midday. Meal is $1 to $2 lower and bean oil up 25 points. Our midday net changes appear to be in reaction to outside markets and the neutral USDA February numbers. The USDA February domestic carryover came in at 450 million bushels which was 5 million more than expected and 10 million more than January due to a 10 million bushel drop in the domestic carryover. The world carryover came in at 80.42 million metric ton versus 79.1 million metric tons expected and 79.28 last month; this was still within the 76.4-81 MMT range of expectations. The light surprise on the report was Argentine production was raised by 1.5 million tons and Brazil unchanged versus a small decrease expected. This lowers chances for a rally/recovery but we can also argue the pressure the few sessions going into the report priced-in the small negative aspect of the higher than expected domestic and world carryovers. On the March soybean chart support is at the $8.52 early January low. Resistance is at the $8.72-6 area where we find the 10-day and 20-day moving averages.

WHEAT

Wheat trade is mixed with Minneapolis a penny lower, Kansas City up 2 cents and Chicago up 4 cents at midday. Mixed trade has bene seen; the midday momentum is slightly higher so the market appears to be shrugging off the negative USDA numbers with interest on exiting shorts, taking profits, due to the fact the market is so low. On the report yesterday the domestic carryover was raised by 25 million bushels, 20 million more than expected to 966 million bushels due to a 25 million bushel drop in the export projection. US 2015-16 exports are now projected to be at 775 million bushels versus 854 million last year and 1.176 billion bushels during the 2013-14 crop year. The global carryover was raised to 238.87 million tons versus 231.9 expected and 232.04 seen last month. This was above the 229.7-234 MMT range of expectations. A 4 million ton drop in Chinese domestic usage and 2-million-ton drop in India were the highlighted changes on the world balance sheet leading to the ending stocks jump. On the March Kansas City chart the previous low at $4.51 3/4 is chart resistance then the 10-day at $4.58. The new contract low printed Tuesday at $4.42 1/4 is chart support.

David Fiala is a DTN contributing analyst and the President of FuturesOne and a registered trading adviser.
David Fiala can be reached at dfiala@futuresone.com
Follow David Fiala on Twitter @davidfiala

(BAS)

Copyright 2016 DTN/The Progressive Farmer. All rights reserved.